Bank of England confirms interest rate will stay at 0.5%

Bank of England confirms interest rate will stay at 0.5%

The Greenback strengthened against the Japanese Yen after the Bank of Japan raised concerns that it was preparing to weaken its currency. The dollar rose by 60pips overnight reaching a high point of 79.26 before stabilizing at the 79.15 level. Against the Australian dollar the US dollar extended its losses from earlier in the week. A set of strong economic figures from the Aussie and better than expected GDP figures led to investors willing to take risks in the marketplace.

In Europe the single currency consolidated to around the 1.25 level against the greenback after the European central bank maintained the currencies interest rate at the 1% level. Fears over the future of Spain’s banks and the strong resistance from Germany over the idea of offering direct assistance continue to pull on the Euro. The data released by the ECB failed to inspire confidence with investors.

Against the Pound the Dollar has weakened slightly after the Bank of England confirmed that it was maintaining the current interest at the record low of 0.5% and quashed fears of implementing further quantitative easing.

"By implication I guess that it reduces the prospect of QE at lunchtime, but I don't think it eliminates it by any means," Adam Chester, economist at Lloyds, said ahead of the MPC's announcement.

"The Bank of England will be looking at a host of factors - principally the crisis in the Eurozone and the challenging economic environment. It's nothing to get too gung ho about, but it's not as bad as feared."

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